In July, the size of net purchases by foreign investors in the securities market reached the highest level in 1 year and 5 months. Last month, the KOSPI index rose 5.7%, thanks to the buying momentum from foreign investors, who are the "big hands." The most net bought stock by foreign investors was Samsung Electronics, followed by Hanwha Ocean.
According to the Korea Exchange on the 3rd, foreign investors net purchased 6.281 trillion won in the securities market last month. This amount is the highest monthly net purchase since February of last year (7.858 trillion won). Compared to the net purchase amount of 2.693 trillion won in June, the attitude of foreign investors toward Korean stocks appears to have changed significantly.
Foreign investors exhibited net selling for nine consecutive months from August of last year to April of this year. However, in May, they turned into a "buyer" with a net purchase of about 1 trillion won and are gradually expanding their investment scale. The newly inaugurated Lee Jae-myung government in June has expressed a strong will to revitalize the stock market, and expectations for a conclusion to U.S.-Korea trade negotiations are seen as contributing factors.
Moreover, Samsung Electronics announced it will supply large-scale artificial intelligence (AI) chip products to Tesla in the U.S. Expectations for improved performance from Samsung Electronics' foundry division, which has recorded large-scale losses, are resulting in a significant influx of foreign funds into Samsung Electronics. Last month, foreign investors net purchased 3.495 trillion won of Samsung Electronics, accounting for 56% of the total net purchase by foreigners during this period.
Following Samsung Electronics, the stocks that grabbed foreign investors' attention included Hanwha Ocean, SK Square, ISU PETASYS, and Hanwha Aerospace.
Investors are concerned whether the net purchase trend by foreigners in domestic stocks will continue in August. On the afternoon of the 31st of last month, after the government announced a tax reform plan that focuses on tax increases, foreign investors returned to a large-scale selling pattern on the following day, August 1. On that day, foreigners net sold 650 billion won in the spot market and 750 billion won in KOSPI 200 futures.
Although the U.S.-Korea trade negotiations have been concluded, the different tariff levels applied to each item and the fact that there are still issues for both countries to discuss remain uncertain factors. Additionally, the recent surge in the won-dollar exchange rate and the continued outlook for a strong dollar may also limit the inflow of foreign funds into the domestic market.